Russia, EU to discuss updated agreement on transnational gas pipelines: official
Moscow (Platts)--14Dec2012/530 am EST/1030 GMT
Russia is to submit to the EU an updated draft agreement on
transnational gas pipelines during the Russia-EU summit scheduled for
December 21, Russia's energy minister Alexander Novak said Friday.
"The updated [draft] agreement basically features only two major
facilities -- the Nord Stream [gas pipeline] with the OPAL and NEL offshoots,
and the South Stream [gas pipeline]," Novak said at a media briefing.
Should the agreement be adopted by the EU, it will become the basis for
exempting the pipelines from the so-called third energy package, Novak said.
Russia submitted to the EU energy commission the previous draft
agreement on transnational energy facilities in early 2012, Novak said.
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Russia wants the EU to give the three pipelines the status of the
so-called TEN-E, or Trans-European Energy Network, which would exempt them
from the third package rules on third-party access and the separation of gas
trading from gas network operatorship.
But the EU has proved reluctant to give this endorsement as it wants to
prioritize projects that bring in non-Russian gas in order to diversify its
Last week, Russia held a groundbreaking ceremony to mark the start of
construction of the Eur16 billion ($21 billion) South Stream gas pipeline
with a capacity of up to 63 billion cubic meters a year, which is to cross
the Black Sea to Bulgaria and run further on through southern Europe.
Russia's state-owned Gazprom is also studying the possibility of
building one or two additional lines within the Nord Stream gas pipeline
project across the Baltic Sea to northern Europe, which would bring its total
capacity up to 110 Bcm/year. The second line of Nord Stream was commissioned
in October, boosting the system's total capacity to 55 Bcm/year.
The OPAL and NEL pipelines connect Nord Stream with Europe's gas
TALKS ON UKRAINE TO CONTINUE
So far no progress has been achieved over forming a three-party
consortium that would potentially run and modernize Ukraine's gas
transportation system, Novak said at the briefing, adding that the issue was
discussed at a meeting with EU commissioner Guenther Oettinger earlier this
"The EU commission has offered its assistance in ... discussing such a
consortium," Novak said.
In 2002, an agreement was reached on forming the consortium, Novak said,
adding that the actual work has not started as "the Ukrainian party has not
initiated its part of the process."
"Russia is ready to consider modernization of Ukraine's gas system,
should the Ukrainian party make such an offer," he said.
Earlier this week, Russian media reported that President Vladimir Putin
and his Ukrainian counterpart Viktor Yanukovych may meet Tuesday to discuss
key energy issues.
The Russian and Ukrainian governments are in talks to create a
consortium that would control the transportation unit of Ukraine's gas
system, with Gazprom holding a stake in the joint venture.
Ukraine has suggested a trilateral joint venture, which would also
include a European company or companies.
By creating the gas joint venture, Kiev hopes to reach an agreement with
Gazprom to secure a lower price for Russian gas supplies to Ukraine.
However, so far Moscow and Kiev have been unable to reach an agreement
over the value of the facilities.
The gas infrastructure network, widely regarded in Ukraine as
strategically important assets, earns about $2 billion a year from
transporting up to 110 Bcm of Russian gas to European markets.
--Dina Khrennikova, email@example.com
--Edited by Jonathan Fox, firstname.lastname@example.org